Shopify Inc (TSX:SH., NYSE:SHOP) posted a revenue beat for the fourth quarter as earnings fell short of estimates.
Revenue of $2.81 billion was ahead of the $2.73 billion expected, as earnings per share of $0.39 missed the consensus of $0.43.
“Q4 marks our seventh consecutive quarter of 25% or greater revenue growth when excluding logistics,” Shopify CFO Jeff Hoffmeister said.
“Moreover, we grew free cash flow margin sequentially each quarter of 2024, reaching 22% for Q4.”
The company expects first quarter revenue growth in the mid-20% range, in line with Street expectations of 24.4%.
Analysts at Wedbush highlighted that while the company’s Q1 guidance was in line with estimates, it implies that year-over-year revenue will decline from the mid-20% range from 31% year-over-year growth in Q4.
“We expect guidance reflects the lapping of leap day, FX headwinds, and some level of conservatism as management delivered Q4 growth 200 basis points plus above the high end of its guidance range,” they wrote.
The analysts wrote that Shopify continues to deliver healthy year-over-year margin expansion, with its GAAP operating income margin improving by 350 basis points compared to the fourth quarter of 2023.
“We are encouraged by the strength of 4Q results and believe Shopify is well positioned to deliver operating margin expansion this year,” they wrote.
“Shopify remains the dominant eCommerce software platform with a large total addressable market opportunity, considerable pricing power within its subscription services, and ongoing payments expansion with expected gross payments volume of $225 billion-plus in 2025.”
Wedbush repeated its ‘Outperform’ rating and $125 price target on the stock.
Shopify’s shares were little changed following the release of its earnings report, trading hands at about $120 at midday on Tuesday.